Another bank named in the report, Seng Heng Bank, also declined to comment. The third bank, Banco Delta, said it was surprised by the report, as it had always complied strictly with anti-money laundering regulations.

The US investigation centres on "lucrative North Korean enterprises producing narcotics, counterfeit US currency and fake cigarettes", the Wall Street Journal said in its front-page report.

It said such ventures produced the hard currency Pyongyang needed to procure weapons technology abroad.

According to former North Korean traders and financiers who had fled their country, North Korean banks and businesses were reliant on foreign banks for nearly all international transactions, the Wall Street Journal reported.

The paper said the US secret service, justice department, immigration and customs authorities and other agencies were investigating the banks as part of a new initiative against nuclear proliferation that the White House unveiled in June.

In recent weeks, more than 80 people had been arrested in raids in the US and Taiwan targeting the North Korean networks, while more than $5m had been seized in fake $100 bills, the report said.